Let's be Frank: Bloke drags Google to the US Supreme Court over $8.5m privacy payout

New rules needed for an increasingly dubious aspect of American law


Precedent, smechedent

What was particularly galling for Frank in this particular Google privacy case is that the California court system appeared to completely ignore a legal precedent he had painstakingly added to the system in a previous case: that there be no conflict of interests between the lawyers in the case and the cy pres recipients. "The attorneys even acknowledged it [the precedent]," Frank tells us.

But when it went to the Ninth Circuit appeals court, the majority judges relied on a different precedent and argued that the universities in question "have the kind of centers that are relevant here" and that there wasn't "enough of a connection" for it to represent a conflict of interest.

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The dissenting judge, Clifford Wallace, was not at all happy with that reasoning and noted that the claims by the lawyers that there was nothing untoward going on were "unsworn statements" and that his "experience as a trial judge taught me to be skeptical of unsworn statements from lawyers, especially when it comes to conflict of interest issues."

These cases are not decided the same across the United States. There is a spectrum of views for how they should be handled, covering everything from what hurdles lawyers have to jump over before giving money to anyone but the class action members, to how much the lawyers should be allowed to award themselves as a percentage of the final settlement.

But California's Ninth Circuit is by far and away the most permissive court when it comes to cy pres. Frank characterizes it as "anything goes" and is determined to get some "bright line" rules in place that work in the interests of consumers rather than highly paid lawyers.

He wants cy pres to be specifically listed as a "last resort" – something that should only be used when it is "impossible" to get money directly to class action members.

Feasible

That's something that the American Law Institute largely agrees with him on: it thinks cy pres should only occur in "circumstances in which direct distribution to individual class members is not economically feasible, or where funds remain after class members are given a full opportunity to make a claim."

That "economically feasible" argument is at the heart of the Google case. The lawyers claim that because there were 129 million Google user impacted by its policy, the $8.5m payout amount to just four cents per person.

Rather than spend a huge amount of money advertising to people and then allocating a tiny amount to each, Google and their opposing lawyers argued it makes sense to give the money to organizations that can make better use of the funds.

Frank isn't buying it. "It's a fallacious argument. You never pay every class member. On small dollar settlements there is a 0.25 per cent claim rate, so even if you quadruple that rate, you can still pay people $5."

Frank wants a much stronger conflict of interest rule written in to cut off the temptation for a lawyer to name a recipient where they can expect to get some kind of direct or indirect benefit. It's not hard to imagine the additional status and prestige that comes from supplying universities with millions of dollars in funding.

"Lawyers have a fiduciary obligation to their clients," he argues. The fact that there are millions of clients and the lawyers don't physically meet them should not change that basic obligation.

Scourge

And it is that approach and attitude that has enabled Ted Frank and his Center for Class Action Fairness to win appeals on numerous class action settlements, setting legal precedents across the US while also providing tens of millions of dollars directly to American consumers.

It led to legal publication American Lawyer Litigation Daily indentifying Frank as "the indefatigable scourge of underwhelming class action settlements" – a description that pleased him so much he stuck it on his online biography.

Come October/November, that scourge will finally have the opportunity to make the same points he has made in courts across the land to the nine most powerful judges in the country and, he hopes, introduce new rules of the road for an expanding aspect of legal practice (cy pres cases are doubling every five years).

He is confident he can make it happen. "This is not a partisan issue," he notes. "It's not conservative, it's not liberal: it's a legal problem that needs tight rules. I want to win 9-0." ®


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